SAN ANTONIO, TX (April 25, 2016) At four Pic-n-Pac convenience stores northeast of San Antonio, a wild looking flame-haired “Mad Scientist®” beams down from a VP Racing Fuels® branded canopy as customers pull in for a fill-up. The same crazed-looking character appears on new products lining the shelves inside. And at the popular Monster Jam shows that tour the U.S., a Mad Scientist Monster Truck competes under the gaze of a big-headed Mad Scientist mascot.
For Phil Wuest, Director of Operations for McQueeney-based Wuest’s Inc. which owns and operates the Pic-n-Pac stores, the Mad Scientist and VP Racing Fuels brand represent a new formula for success for his business. “Sales are up at every store we branded VP, so no wonder the Mad Scientist is always smiling.”
The branding program that Wuest has adopted is part of a transformational strategy at San Antonio, Texas-based VP Racing Fuels® which, for most of its 40-year history, was a niche brand that formulated high-tech performance fuels for all forms of racing. When introduced to the VP brand, former Valero Energy executive Alan Cerwick saw something else – a new business model with the potential to change the game in the convenience store market and move the company mainstream. Having recently purchased a majority share of VP, Cerwick is now guiding the company on a path to become a global consumer brand.
Transforming a Niche Marketer into a Global Brand
Since the 1970s, race fuel formed the basis of VP’s identity as it produced blends for everything from drag racing and circle track cars to dirt bikes, snowmobiles and vintage airplanes. In its move toward mainstream, however, VP has introduced products for a broader consumer market including fuels designed for small 2 and 4-cycle engines like lawnmowers and string trimmers, along with fuel additives for commuter cars and trucks.
While these products are enjoying rapid growth, VP’s highest profile program involves branding gas stations. There are currently more than 100 VP-branded stations in 24 states with many more in the pipeline awaiting reimaging. Interest in the program is also coming from distributors in Canada, Puerto Rico and Costa Rica.
It was Cerwick’s idea to brand gas stations to build awareness of the company and provide retail distribution for VP’s “consumer” products. “It can be tough to convince a convenience store owner with an expiring contract to switch from a household brand like Shell, Exxon or Valero to a relatively unknown brand like VP,” said Cerwick. “But with 100+ stations, more people are recognizing we’re the real deal. Plus we’re batting 1.000, in that every new VP-branded station to date has seen substantial and sustained growth in gallons, revenue and profit.”
To support the growing brand program and keep up with demand for its consumer products, VP’s payroll increased by 30% in 2015. Another 30% increase is projected this year. The company also is in the process of doubling its tank storage capacity at its plant in Elmendorf along with adding space to its production and warehouse facilities.
David vs. Goliath Redux
Just as it competed in the racing segment with large oil refiners in its early days and won, VP is now taking on major oil company brands with its VP Racing Fuels-branded gas stations. “Besides leveraging our reputation for quality and loyalty among performance enthusiasts, we have another key advantage – we’re a race fuel company, not an oil company,” said Steve Scheidker, VP’s Director of Corporate Communications. “We don’t carry any of the oil companies’ negative baggage nor their conservative mind-set. Rather, VP is known for leading edge technology, ‘Makin’ Power’ and having fun!”
The ‘fun’ component is immediately evident at VP-branded gas stations where drivers are greeted by the grinning Mad Scientist. At most stations, the Mad Scientist also beckons customers to a metal VP Fuel Cube™ that dispense 5-gallon pails of VP’s off-road race fuel blends to drag racers, dirt bike riders and others looking for a power boost for their weekend activities.
“The significance of our brand positioning can be illustrated with one question: How many people would you expect to buy a t-shirt emblazoned with the logo of a major oil brand?” said Scheidker. “The answer is probably very few, yet more than one VP c-store owner has called in a panic to order VP apparel to appease passionate race fan customers who expect to find it at their store!”
Quintessential American Success Story
As a young drag racer in the early 1970’s, Steve Burns perceived that race fuels available at the time did not fulfill their potential for maximizing horsepower. The Lee High School graduate began researching fuel-related chemistry and physics, then set about scrounging the chemicals he needed from various refineries in south Texas.
Burns began experimenting with the volatile chemicals in his apprehensive parents’ garage. Once satisfied with his new formula, he poured it into a used oil drum, hauled it to the local dragstrip in his pick-up and pleaded with racers to give it a try. Those who overcame their skepticism and tried it saw an increase in power and speed, and found themselves in the win column.
As word of Burns’ success spread, racers’ demand for his formula increased and he decided to start a business which he incorporated as VP Racing Fuels. Over the ensuing years he became known as the “Mad Scientist,” an apt nickname given his self-taught expertise in chemistry and near maniacal passion for “makin’ power” and winning.
Disrupting the Convenience Store Market
While Burns continues to direct VP’s research and development, Cerwick is focused on VP’s innovative brand program. Based on extensive experience in the downstream business during 19 years spent first at Koch Industries and later Valero Energy, Cerwick sees the VP Racing Fuels brand as key to a game-changing business model that will accelerate vital changes needed in the fuel industry. “The industry needs to evolve to enable distributors and c-store owners to be more successful. That’s exactly what our program is designed to do, but at its heart is the VP brand which provides the foundation that enables every aspect of the program.”
Phil Wuest refers to VP’s “branded unbranded” program. “VP has the look of a major brand with its attractive, professional image, but offers the chance to buy unbranded supply to compete more effectively with grocery chains, super chains and major brands. Another driving factor for us are the substantial savings we realize from VP’s low credit card processing fees and elimination of monthly network fees. Plus, we generate new revenue streams from VP’s race fuels, additives and apparel. All these products appeal to race fans and gearheads who are drawn to VP because of its reputation in racing.”
Product Innovations for the Consumer Market
To date, VP’s most successful product launch in the general consumer space is VP Small Engine Fuel, designed to solve the problems associated with ethanol-blended street gas, reported to be “the number one problem facing the outdoor power equipment industry.” In equipment such as mowers, string trimmers and chain saws, ethanol attracts moisture and leaves deposits, fouling fuel systems and rendering equipment hard to start or inoperable. Because it’s ethanol-free, VP Small Engine Fuel prevents all those problems and saves money on repairs. VP-SEF also is conveniently pre-mixed with oil for 2-cycle engines so no measuring or mixing is required.
Sales of VP-SEF increased 50% in 2015, with sales projected to more than double in 2016. Retailers can carry VP-SEF either as a branded product or under private label. Now carried in 14,000 retail outlets nationwide, VP’s current partners include AutoZone, Home Depot, Walmart, Tractor Supply, Grainger and NAPA stores, as well as online retailers Amazon.com and Sears.com. Notably, one of VP’s private label agreements is with Briggs & Stratton, one of the world’s largest manufacturers of small engines.
The more recent launch of VP’s fuel additives for gas and diesel engines, branded “Madditives®“, has caught the attention of major retailers as well. Including Autozone, the line is distributed via 5000+ outlets nationwide.
Organic Marketing Muscle
VP’s c-store and other retail partners benefit from its marketing prowess derived from its affiliation with numerous race tracks, series, teams and action sports, from the WeatherTech SportsCar Championship and World of Outlaws Sprint Cars to AMA Supercross and Monster Jam. “Marketing is inherent in our core business as VP’s brand is exposed to millions of customers every weekend of the year at live events and via race broadcasts on major networks including Fox Sports, ESPN2, NBC Sports, CBS Sports and other media outlets,” said Chris Wall, VP’s Chief Marketing Officer.
Other examples of VP’s organic exposure include “Fast & Furious 7,” the blockbuster released last year in which the VP logo is featured prominently in several racing scenes, and NBC’s “Jay Leno’s Garage,” which twice has included guest appearances by VP personnel to discuss VP products. “VP’s nontraditional edginess appeals to a younger demographic and enables social networking and viral marketing programs that our conservative competitors could not even contemplate,” said Wall.
VP ships its drummed products via its own fleet and commercial carrier, with bulk shipments transported by tanker trucks and rail. While it sources chemicals from companies in the U.S. and around the world, every VP product is blended in Elmendorf and packaged there or at other VP facilities in the U.S. About 10% of VP’s revenues are derived from exports to Canada, Mexico, Central and South America, Europe, Russia, the Middle East, Australia, New Zealand and the Pacific Rim, and its first shipment of racing fuel recently landed in mainland China.
“These are fun and exciting times at VP Racing Fuels. It’s still early, but each of our new initiatives is gaining serious traction,” said Cerwick. “The buy-in we’re getting from our branding and other retail partners validates the strength of the VP brand and our ability to deliver the competitive advantages they’re looking for. VP is well-positioned to execute our plans and I’m optimistic our goal of becoming a global consumer brand is well within reach.”